Novo Banco issues 500 million euros of subordinated debt. Pays 9.875% interest – bond

Novo Banco issued new 10-year debt. This is a subordinated bond, with an early mid-term repayment option, and the higher-than-expected demand has seen the Mark Burke-led bank actually raise the amount in the process. The interest rate will be 9.875% for the first five years.

Novo Banco tells us that today [quarta-feira] Subordinated debt issuance in the amount of 500 million euros, with maturity on December 1, 2033 and an option for early repayment by the bank at the end of five years,” the bank announced in a statement to Securities Market Commission (CMVM).

The bank had announced its intention to issue a new Tier 2 issue of €400 million. The deal generated “strong interest” in the market, with demand exceeding three times the amount expected for the issue. The final price decreased by 0.375% and the bank decided to increase the amount of the issue to 500 million euros. The new version, which should replace the existing Tier 2 version, which was issued in July 2018, has a lower credit spread of 150 basis points. [pontos base] Versus the previous version, which is evidence of the successful track in recent years. This transaction is positive in terms of MREL and capital,” said Novo Banco.

The previous line to be replaced is about commits Subordinated “Tier 2” notes maturing in 2028 with an interest rate of 8.5%. The new bonds carry an annual interest rate of 9.875% for the first five years, after which the five-year “average swap” rate is increased, plus a margin.

The issuance – the first since the closing of the restructuring plan – was raised with international institutional investors. The final allocation included investors from the UK (26%), France (21%), Sweden (10%), the US (10%), Spain (5%) and Germany (5%), with asset managers representing over 78%. . The liquidation will take place on June 1, 2023. Bank of America Securities, Citigroup, Credit Agricole CIB, Credit Suisse, JPMorgan, and Societe Generale act as joint principals and bookrunners.

(News updated at 19:50)